A Choice, Not an Echo

Mitt Romney says that intrusive government has stifled the free market. President Obama says that government must play a role in correcting market failures.

Arguably, no presidential campaign in the past 30 years has dawned with voters as singularly focused on a single issue as they are this year. In the aftermath of a debilitating financial crisis and amid a feeble and halting recovery from recession, polls show that voters want economic growth and more jobs. President Obama and Mitt Romney are offering dramatically different paths to those ends—in philosophy and in the fine print of policy; in the targets of their campaign-trail attacks; and even in what they’re not saying about the nation’s most pressing economic problems.

This all-about-the-economy election has given Obama and his Republican challenger no shortage of topics to argue about. They include economic fairness; the federal budget deficit; the president’s understanding of America’s free-enterprise system and what makes it exceptional; the importance of the effective income-tax rate for Warren Buffett’s secretary; the macroeconomic merits of the private-equity business model; spending cuts; tax cuts; tax hikes; regulatory burdens; investments in education, infrastructure, and technology; the plight of the middle class; the effects of the 2009 stimulus package; the growing gap between the rich and poor; and Greece.

Not included, though, is a detailed debate over how to get millions of unemployed Americans back to work right away. Each candidate has a reason for soft-pedaling when it comes to delivering fast-acting comfort to the 13 million in the United States who are looking for a job and can’t find one and who will spend an average of 40 weeks on the unemployment rolls before they return to work. Romney’s reason for avoiding this question is very different than Obama’s, a reality that reflects the candidates’ divide in economic thinking.

Romney’s economic philosophy begins with the classic conservative notion that intrusive government has stifled the free market. Obama’s starts with the liberal notion that government can and must play a critical role in nurturing innovation and vital industries. Each camp lays out medium- and long-term strategies for improving America’s economic fundamentals and coaxing growth and job-creation back up to speed. In the short term, neither has a lot to offer. Obama has no FDR-style public-works program to employ millions of people. Romney has no plans to impose dramatic and immediate austerity—nothing on par with the proposals offered by the most conservative members of Congress, or even British Prime Minister David Cameron—to squash market fears and unleash business confidence and hiring.

This is by design. Romney’s 160-page economic plan leads off with the assertion that Washington has weakened the United States’ long-term growth prospects through its efforts to create jobs in the crisis’s aftermath. As his lead economic adviser, Columbia Business School Dean R. Glenn Hubbard, writes in the introduction, “In the first conversation I had with Governor Mitt Romney in the post-crisis period, he asked me why policymakers were not more focused on the seeds of the crisis and on the need to build a foundation for long-term growth. With the mantras of fiscal stimulus and easy money being repeated in Washington, his question seemed spot-on to me. Could we change the conversation from policies contributing to the long-term growth of government to policies contributing to the long-term growth of the economy?”

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Obama, by contrast, is struggling with voters’ widespread belief that his short-term economic efforts have failed, and with political realities that largely preclude further steps in the same direction. He eagerly nudges voters toward the perception that the national economy is improving. Congress has ignored the president’s few recent proposals to stimulate consumer spending or business investment, including deepening the temporary reduction in payroll-tax rates and upping national infrastructure spending by several hundred billion dollars.

So Obama has fallen back to campaigning on a series of small-scale, poll-popular initiatives such as boosting manufacturing exports, forcing millionaires to pay higher tax rates, and developing an economy that is “built to last.” He and his top economic advisers have increasingly turned their rhetoric and policy attention to the growing gap between the wealthiest Americans and everyone else.

As Alan Krueger, the chairman of Obama’s Council of Economic Advisers, said in a speech earlier this year, “The rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities and is a threat to our economic growth. Restoring a greater degree of fairness to the U.S. job market would be good for businesses, good for the economy, and good for the country.”

ECONOMIC PHILOSOPHY

Complicating any comparison between Obama and Romney is the sheer diversity of economic policies that each candidate has championed in the past, and the question of which ones he would pursue in the future.